June 4th - Stocks To Watch PBA, YTL, Supermax, Unisem, AirAsia X, Felda

by **Cals** Wed 04 Jun 2014, 02:59

Stocks To Watch PBA, YTL, Supermax, Unisem, AirAsia X, Felda

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com

Tuesday, 03 June 2014 18:55

KUALA LUMPUR (June 3): Based on news flow and corporate announcements today, the stocks that may be in focus tomorrow include:

PBA Holdings Bhd said the government has renewed its water-supply licence in Penang for another two and a half years.

PBA said the energy, water and communications minister has approved the service-licence renewal application by PBA's wholly-owned subsidiary Perbadanan Bekalan Air Pulau Pinang Sdn Bhd.

PBA said the renewal, effective June 1, 2014, would enable it to supply water until December 31, 2016.

YTL Corporation Bhd’s next generation of the Yeoh family will expand YTL's cement business in Indonesia, Myanmar and Vietnam, said Tan Sri Francis Yeoh, the managing director of YTL Group of Companies.

"We would like to expand our cement business now with the next generation — my son who attends the University of Cambridge — and my brother," he said at the seventh series of the Global Malaysia Series today.

"They are very entrepreneurial," he added.

Yeoh said YTL had established 'small footprints' in Indonesia, Myanmar and Vietnam from which to expand its reach in the cement business.

Yeoh said YTL is now the second largest firm within the industry in Malaysia and the most profitable. The group is "doing well" because it is able to build cement plants at lower capital expenditure compared to others.

Supermax Corp Bhd is expecting its performance for the financial year ending Dec 31, 2014, to be the same as or slightly lower than that of FY2013.

Speaking to reporters today after the group's annual general meeting, Supermax Executive Chairman and Group Managing Director Datuk Seri Stanley Thai said the group's future performance depended on changes in tariff rates for gas and electricity.

"How low we go depends on how much the government decides to raise tariffs on electricity.

"We should be given some warning beforehand about a rise in cost so that we can prepare and pass on the cost. At the moment, my order book is oversold by two months, so how can I suddenly change the price for my customers?" he said.

For FY2013, Supermax posted a net profit of RM119.72 million on revenue of RM1.05 billion.

Thai also said that due to a fire in Supermax's plant in Alor Gajah, the group's performance for the second quarter (2QFY2014) would be impacted by a physical production loss.

"We are insured for our losses and it is all fully claimable. The payment should be reflected in our balance sheets during the third or fourth quarter this year," said Thai. The plant has already resumed operations, effective June.

Unisem (M) Bhd has seen its shares accumulated by its group Managing Director and Chairman John Chia Sin Tet in the recent few weeks.

A filing with Bursa Malaysia today showed that Chia had acquired 300,000 shares at RM1.29 on May 30, 2014 and a further 100,000 shares at RM1.31 yesterday.

Following the shares purchased, Chia’s shareholding stood at some 42.6 million shares with a direct interest of 6.32% in Unisem.

Unisem closed higher today at RM1.37 after gaining 6 sen or 4.6%.

AirAsia X Bhd will allocate at least RM2.1 billion in 2014 as capex to acquire seven new Airbus A330-300 aircraft, said CEO Azran Osman Rani.

He told Bernama that to date, the long-haul budget airline had received three aircraft while the rest would be delivered gradually by year-end.

The airline received one Airbus A330-300 on finance lease and two A330-300s on an operating lease in the first quarter of the year.

"We are on track to settling the aircraft orders that we have committed to. Each of the aircraft will cost more than RM300 million and financing is through a variety of means," he said.

Asked to elaborate on the funding, Azran said it would be through debt financing and operating leases to maintain AirAsia X's cashflow.

"We aim to be net cash neutral or net cash positive, despite some short-term earnings pressure. This is to ensure that our cash flow at year-end is the same as the start of the year," he added.

Felda Global Ventures Bhd (FGV) will benefit from its plantation acquisition of PUP and full control of FHB this year, according to its Chairman Tan Sri Mohd Isa Abdul Samad.

Isa, in his letter to shareholders, said: “The coming year will see the group harvesting the low hanging fruits of its recent acquisitions.

“The PUP (Pontian United Plantations Bhd) acquisition has already started contributing to FGV’s bottom-line in the fourth quarter of 2013. As most of its trees are at a prime age of 13 years, there will be minimal replanting costs incurred for the next 10 years.”

PUP accounted for 20% of FGV’s plantations business in February 2014.

The chairman’s letter, which is within FGV’s just-released annual report, added the current year will also see the plantation group book earnings from FHB (Felda Holdings Bhd), whose status has changed from an associate to a fully-owned unit on Dec 27 last year.

FHB is said to be “a very profitable entity” with subsidiaries and other related companies involved in the processing of crude, refined and packed palm oil products. It is also involved in research and development, bulking and transportation services, rubber processing and making of fertilisers.

According to Isa, FHB generated a consolidated profit before tax of RM383.4 million in 2013 and had a net cash position of RM1,656.6 million.

“The full-year earnings of FHB will be reflected in FGV’s financial performance in 2014,” he said.

As FGV still has a balance of RM1.33 billion from its IPO (initial public offering) coffers and cash reserves of RM3.70 billion, it is “in a strong position to pursue mergers and acquisitions”.